Official data showed on Wednesday that Britain’s annual inflation rate eased in line with expectations in January, bolstering chances that the Bank of England will cut its benchmark interest rate next month.

The Office for National Statistics said the Consumer Prices Index fell to 3.0 per cent in January from 3.4 per cent in December, 2025.

Chief economist at the ONS, Grant Fitzner, revealed that inflation fell to its lowest annual rate since March last year, driven partly by a decrease in petrol prices.

The data reinforces the Bank of England’s guidance that inflation is set to cool towards its two-per-cent target in the coming months, as easing energy bills help to offset rising water bills and other elevated costs.

The BoE left its benchmark interest rate at 3.75 per cent earlier this month but signalled that further cuts were ahead.

While wage growth in Britain has slowed in the private sector, it remains elevated in the public sector, according to official figures, which show UK unemployment at a five-year high of 5.2 per cent.

Prime Minister Keir Starmer’s Labour Party has struggled to revive Britain’s sluggish economy since winning a general election in July 2024, having raised taxes in its two annual budgets.